Quantitative Equity Report | Release: 23 Jan 2019, 08:37, GMT-06:00 | Reporting Currency: PHP | Trading Currency: PHP | Exchange:XPHS

Page 1 of 4

East West Banking Corp EW

Last Close Fair ValueQ Market Cap Sector Industry Country of Domicile
23 Jan 2019 23 Jan 2019 02:00 UTC 23 Jan 2019
12.40 17.07 27,899.7 Mil y Financial Services Banks - Regional - Asia PHL Philippines

There is no one analyst in which a Quantitative Fair Value Estimate and Quantitative
Star Rating are attributed to; however, Mr. Lee Davidson, Head of Quantitative
Price vs. Quantitative Fair Value
Research for Morningstar, Inc., is responsible for overseeing the methodology that 2015 2016 2017 2018 2019 2020 Quantitative Fair Value Estimate
supports the quantitative fair value. As an employee of Morningstar, Inc., Mr. Total Return
Davidson is guided by Morningstar, Inc.’s Code of Ethics and Personal Securities
Trading Policy in carrying out his responsibilities. For information regarding Conflicts Sales/Share
40
of Interests, visit http://global.morningstar.com/equitydisclosures Forecast Range
Forcasted Price
32 Dividend
Company Profile
Split
East West Banking Corporation is a commercial bank Momentum: —
24
providing financial services in the Philippines. The bank Standard Deviation: 28.93
generates all revenue domestically. The bank operates Liquidity: High
16
through four segments: Consumer banking, Retail banking,
Corporate banking, and Treasury and Trust. The largest 10.28 52-Wk 20.93
segment is consumer banking, which provides loan services 8

for individuals including credit cards, mortgages, auto loans, 9.56 5-Yr 24.07
and personal loans. Retail banking is the next- largest
-18.6 -0.7 74.1 -44.1 4.2 Total Return %
segment and provides deposit services, emerging market
-15.5 -7.4 46.0 -29.7 -0.8 +/– Market (Morningstar World
Index)
Quantitative Scores Scores — 1.44 1.04 — — Trailing Dividend Yield %
All Rel Sector Rel Country — 1.44 1.04 — — Forward Dividend Yield %
Quantitative Moat None 6 5 5 13.9 9.2 10.0 9.9 10.3 Price/Earnings
Valuation Undervalued 66 77 91 1.6 1.4 2.1 1.4 1.5 Price/Revenue
Quantitative Uncertainty Very High 65 71 51 Morningstar RatingQ
Financial Health Strong 98 77 97 QQQQQ
QQQQ
QQQ
EW QQ
PHL y Q

2013 2014 2015 2016 2017 TTM Financials (Fiscal Year in Mil)
Undervalued Fairly Valued Overvalued
12,380 13,678 15,505 20,074 23,786 24,154 Revenue
Source: Morningstar Equity Research 34.2 10.5 13.4 29.5 18.5 1.5 % Change
— — — — — — Operating Income
— — — — — — % Change
Valuation Sector Country
Current 5-Yr Avg Median Median 2,056 2,073 2,004 3,408 5,051 4,573 Net Income
Price/Quant Fair Value 0.73 0.91 0.87 0.84 2,312 3,353 4,843 18,654 -1,380 -1,927 Operating Cash Flow
Price/Earnings 10.4 11.9 12.7 18.4 -1,614 -1,767 -834 -783 -482 -461 Capital Spending
Forward P/E — — 10.5 12.7 698 1,587 4,009 17,871 -1,863 -2,388 Free Cash Flow
Price/Cash Flow — 6.9 9.5 11.0 5.6 11.6 25.9 89.0 -7.8 -9.9 % Sales
Price/Free Cash Flow — 6.6 10.9 20.4 1.18 1.19 0.96 1.51 2.25 1.21 EPS
Trailing Dividend Yield % — — 3.64 2.45 3.4 1.1 -19.4 57.6 48.5 -46.3 % Change
Price/Book 0.7 1.1 1.1 1.5 3.76 3.00 3.23 5.00 3.46 -0.85 Free Cash Flow/Share
Price/Sales 1.5 1.9 2.9 2.1 — — — 0.18 0.22 0.00 Dividends/Share
10.93 12.03 13.59 14.81 16.71 18.50 Book Value/Share
Profitability Sector Country 1,743 2,250 2,250 2,250 2,250 2,250 Shares Outstanding (Mil)
Current 5-Yr Avg Median Median
Return on Equity % 11.6 10.6 10.1 9.5 Profitability
11.2 10.2 7.6 10.4 13.8 11.6 Return on Equity %
Return on Assets % 1.4 1.3 1.4 3.6
Revenue/Employee (Mil) 3.7 3.3 0.8 9.1 1.6 1.3 1.0 1.3 1.7 1.4 Return on Assets %
16.6 15.2 12.9 17.0 21.2 18.9 Net Margin %
Financial Health
0.09 0.08 0.07 0.08 0.08 0.07 Asset Turnover
Sector Country
Current 5-Yr Avg Median Median 7.3 8.8 7.4 8.5 8.1 8.1 Financial Leverage
Distance to Default 0.9 0.8 0.8 0.6 — — — — — — Gross Margin %
Solvency Score — — 503.7 536.5 — — — — — — Operating Margin %
Assets/Equity 8.1 8.2 3.7 1.9 — — — — — — Long-Term Debt
Long-Term Debt/Equity — — 0.3 0.4 19,386 21,448 31,403 34,449 39,006 41,615 Total Equity
4.0 3.9 4.4 5.8 7.4 8.3 Fixed Asset Turns
Growth Per Share Quarterly Revenue & EPS Revenue Growth Year On Year %
1-Year 3-Year 5-Year 10-Year Revenue (Mil) Mar Jun Sep Dec Total
Revenue % 18.5 20.3 20.9 — 2018 5,845.0 6,367.6 6,637.6 — —
Operating Income % — — — — 2017 6,083.2 6,046.6 6,312.5 5,267.4 23,786.0 35.0
Earnings % 48.5 23.7 14.5 — 2016 5,124.2 5,267.8 5,308.0 4,373.8 20,073.8
Dividends % 25.0 — — — 2015 4,153.5 3,775.0 3,932.5 3,664.7 15,505.3 19.3 18.7 18.9 20.4
14.8
Book Value % 13.2 12.1 11.8 — Earnings Per Share ()
5.3 5.1
Stock Total Return % -39.9 6.3 -4.2 — 2018 0.50 0.57 0.45 — —
2017 0.54 0.57 0.54 0.59 2.25
-3.9
2016 0.35 0.35 0.34 0.48 1.51
2016 2017 2018
2015 0.34 0.18 0.13 0.31 0.96

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Quantitative Equity Report | Release: 23 Jan 2019, 08:37, GMT-06:00 | Reporting Currency: PHP | Trading Currency: PHP | Exchange:XPHS Page 2 of 4

Log (Quant FVE/Price) between (0.5*Quantitative Uncertainty, 1*Quantitative

Quantitative Equity Reports Overview Uncertainty)
Five-Star – the stock is undervalued with a reasonable margin of safety.
Log (Quant FVE/Price) > 1*Quantitative Uncertainty

The quantitative report on equities consists of data, statistics and quantitative iv. Quantitative Uncertainty: Intended to represent Morningstar’s level of
equity ratings on equity securities. Morningstar, Inc.’s quantitative equity uncertainty about the accuracy of the Quantitative Fair Value Estimate.
ratings are forward looking and are generated by a statistical model that is Generally, the lower the Quantitative Uncertainty, the narrower the potential
based on Morningstar Inc.’s analyst-driven equity ratings and quantitative range of outcomes for that particular company. The rating is expressed as Low,
statistics. Given the nature of the quantitative report and the quantitative Medium, High, Very High, and Extreme.
ratings, there is no one analyst in which a given report is attributed to; however, Low – the interquartile range for possible fair values is less than 10%
Mr. Lee Davidson, Head of Quantitative Research for Morningstar, Inc., is Medium – the interquartile range for possible fair values is less than 15%
responsible for overseeing the methodology that supports the quantitative but greater than 10%
equity ratings used in this report. As an employee of Morningstar, Inc., Mr. High – the interquartile range for possible fair values is less than 35% but
Davidson is guided by Morningstar, Inc.’s Code of Ethics and Personal Securities greater than 15%
Trading Policy in carrying out his responsibilities. Very High – the interquartile range for possible fair values is less than 80%
but greater than 35%
Extreme – the interquartile range for possible fair values is greater than
Quantitative Equity Ratings
80%
Morningstar’s quantitative equity ratings consist of: (i) Quantitative Fair Value
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the “Quantitative Ratings). firm will face financial distress in the near future. The calculation uses a
predictive model designed to anticipate when a company may default on its
financial obligations. The rating is expressed as Weak, Moderate, and Strong.
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driven ratings of a company’s peers as determined by statistical algorithms.
Moderate – assigned when Quantitative Financial Health is between 0.2
Morningstar, Inc. (“Morningstar”, “we”, “our”) calculates Quantitative Ratings
and 0.7
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assign to companies. Please go to fair value estimate for that security.
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the combination of our Quantitative Fair Value Estimate, current market price, and an investor’s principal value will fluctuate so that, when redeemed, an
and the Quantitative Uncertainty Rating. The rating is expressed as One-Star, investor’s shares may be worth more or less than their original cost. A
Two-Star, Three-Star, Four-Star, and Five-Star. security’s current investment performance may be lower or higher than the
One-Star – the stock is overvalued with a reasonable margin of safety. investment performance noted within the report.
Log (Quant FVE/Price) < -1*Quantitative Uncertainty
Two-Star - the stock is somewhat overvalued. The quantitative equity ratings are not statements of fact. Morningstar does not
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Three-Star – the stock is approximately fairly valued. price target will not be met due to such things as unforeseen changes in
Log (Quant FVE/Price) between (-0.5*Quantitative Uncertainty, 0.5*Quantitative demand for the company’s products, changes in management, technology,
Uncertainty) economic development, interest rate development, operating and/or material
Four-Star – the stock is somewhat undervalued. costs, competitive pressure, supervisory law, exchange rate, and tax rate. For

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Quantitative Equity Report | Release: 23 Jan 2019, 08:37, GMT-06:00 | Reporting Currency: PHP | Trading Currency: PHP | Exchange:XPHS Page 3 of 4

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Quantitative Equity Report | Release: 23 Jan 2019, 08:37, GMT-06:00 | Reporting Currency: PHP | Trading Currency: PHP | Exchange:XPHS Page 4 of 4

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